Political Science

This cracks me up:

The illustrations on the banknotes show generic examples of architectural styles such as renaissance and baroque rather than real bridges from a particular member state, which could have aroused envy among other countries. “The European Bank didn’t want to use real bridges so I thought it would be funny to claim the bridges and make them real,” Stam told Dezeen.

The article headline is “Fictional bridges on Euro banknotes constructed in the Netherlands.”  Perhaps this will prove a broader and subtle metaphor for making the eurozone actually work…

For the pointer I thank Joel Cazares.

There is a new article by Seitz, Tarasov, and and Zakharenko:

This paper develops a quantitative model of trade, military conflicts, and defense spending. Lowering trade costs between two countries reduces probability of an armed conflict between them, causing both to cut defense spending. This in turn causes a domino effect on defense spending by other countries. As a result, both countries and the rest of the world are better off. We estimate the model using data on trade, conflicts, and military spending. We find that, after reduction of costs of trade between a pair of hostile countries, the welfare effect of worldwide defense spending cuts is comparable in magnitude to the direct welfare gains from trade.

There are ungated versions here, and for the pointer I thank the excellent Kevin Lewis.  Kevin also directs our attention to this paper: “…these results provide evidence for a relationship between feelings of disgust and the endorsement of equality-promoting political attitudes.”

Here for instance is the CR symposium on John Tomasi’s Free Market Fairness.  I believe there will be more to come.

From Arthur R. Kroeber, here is the summary on his economics:

This popular reading is unduly negative. Here is another that fits the facts at least as well: After a brief scare, the property market stabilized, in large measure thanks to the removal of unreasonable restrictions on house purchases, rather than an unsustainable blowout in credit growth. By the end of the year the economy was still growing at the fastest pace of any major economy (7.3 percent), although a slowdown next year seems likely given the apparent intention to constrain credit growth. In June the Politburo approved the biggest fiscal reform in 20 years, which aims to restructure troublesome local-government debts and revamp the tax structure to cut back on perverse incentives. November saw a significant opening of the capital account, as the “Hong Kong-Shanghai Stock Connect” program permitted investors in those two financial hubs to put money directly in each others’ stock markets. Partly in anticipation of this event, Chinese stocks staged a big rally in the second half of the year which made Shanghai the world’s second best performing market in 2014. And in December the People’s Bank of China released draft rules for deposit insurance, setting limits on the government’s unlimited guarantee of the financial system and setting the stage for full deposit-rate liberalization in the next year or two.

That is not exactly my view, but this is an intelligent, optimistic account of the current China.  The post is interesting throughout, and most of it is not on economic issues at all: “This record is stronger than that of any other major world leader in the last two years”  Recommended.

Hyattsville is considering a charter amendment that would lower the voting age to 16 as part of its effort to encourage more voter participation.

If adopted, the Prince George’s County city — home to 18,000 people less than a mile from the District of Columbia border — will follow Takoma Park in neighboring Montgomery County as the second municipal government in the nation to extend voting rights to minors.

There is more here.

…the swaps push-out rule — section 716 of Dodd-Frank, which would require banks to book their derivatives in subsidiaries that are not their insured depository institutions — may be killed as part of the new deal to fund the government. Or here is Mike Konczal arguing to preserve the rule. You don’t need me to tell you how terrible the politics (all politics) are — Why do financial regulation in an unrelated spending bill? Why rewrite financial regulation based on a draft by Citigroup lobbyists? – but let’s spend a minute on why it’s not worth caring about.

First: The rule doesn’t apply to most derivatives. Federal Deposit Insurance Corporation Vice Chairman Tom Hoenig:

“In fact, under 716, most derivatives — almost 95% — would not be pushed out of the bank. That is because interest rate swaps, foreign exchange and cleared credit derivatives can remain within the bank. In addition, derivatives that are used for hedging can remain in the bank. The main items that must be pushed out under 716 are uncleared credit default swaps (CDS), equity derivatives and commodities derivatives. These are, in relative terms, much smaller and where the greater risks and capital subsidy is most useful to these banking firms.”

[This is now Levine again.]  I have my biases, but I have a hard time believing equity derivatives will bring down a bank. Uncleared CDS, I’ll grant you, has a rough track record, though the market is slowly moving away from it in general. But the big derivatives risks, by notional, were going to be allowed to remain in the depository banks anyway. “Oh but no one could be blown up on interest rate swaps,” you say, as the Fed discusses the timing of rate increases.

Second: Pushing out derivatives into non-insured subsidiaries doesn’t make them go away. Defenders of the rule cite the example of AIG, which foundered on uncleared CDS and brought down the financial system. AIG: not an insured bank! Neither was Lehman! The people arguing for the swaps push-out rules are not people who, in other contexts, would say that only insured depository banks get any government support. They’d say that “too big to fail” banks (you know: derivatives dealers) pose risks to the financial system even in their non-bank subsidiaries, risks that lead to an implicit expectation of government support beyond the explicit FDIC insurance. Here, they are right. If JPMorgan blows itself up trading CDS, that will be a problem for everyone, whether it happens in the insured bank or some uninsured subsidiary. The rule won’t stop that. The rule is (was?) fine, but it’s not worth getting upset about. This is all theater.

The link is here.

“Something out there is killing everything, and you’re probably next.”

You can view the talk here.  It is called “The Great Filter.”

You can file this one under “Questions that are rarely asked.”  The authors are Bauman, Gale, and Milton and the subtitle is Cross sectional study of political affiliation and physical activity.  It seems, in fact, that the armchair socialists are up out of their chairs:

Objective To examine the validity of the concept of left wing “armchair socialists” and whether they sit more and move less than their right wing and centrist counterparts.

Design Secondary analysis of Eurobarometer data from 32 European countries.

Setting The study emanated from the authors’ sit-stand desks (rather than from their armchairs).

Participants Total of 29 193 European adults, of whom 1985 were left wing, 1902 right wing, 17 657 political centrists, and 7649 politically uncommitted.

Main outcome measures Self-reported political affiliation, physical activity, and total daily sitting time.

Methods Linear models were used to examine the relation between physical activity, sitting time, and reported political affiliation.

Results The findings refute the existence of an “armchair socialist”; people at the extremes of both ends of the political spectrum were more physically active, with the right wing reporting 62.2 more weekly minutes of physical activity (95% confidence interval 23.9 to 100.5), and the left wing 57.8 more minutes (20.6 to 95.1) than those in the political centre. People with right wing political affiliations reported 12.8 minutes less time sitting a day (3.8 to 21.9) than the centrists. It is those sitting in the middle (politically) that are moving less, and possibly sitting more, both on the fence and elsewhere, making them a defined at-risk group.

Conclusions There is little evidence to support the notion of armchair socialists, as they are more active than the mainstream in the political centre. Encouraging centrists to adopt stronger political views may be an innovative approach to increasing their physical activity, potentially benefiting population health.

The full paper is here, and for the pointer I thank Michelle Dawson.

Binyamin Appelbaum has a new and excellent piece on this topic:

Even the 2012 presidential election, which recorded $2.6 billion in campaign spending, underperformed many forecasts. And spending has declined in each of the last two congressional elections. Candidates and other interested parties spent $3.7 billion on this year’s midterms, down from an inflation-adjusted total of $3.8 billion in 2012, which was less than the $4 billion spent in2010, according to the nonprofit Center for Responsive Politics. (These figures do not include a few hundred million dollars in unreported spending on issue ads.) In fact, spending has dropped as the economy has grown and despite a series of contests in which at least one house of Congress was plausibly at stake. “Dire warnings rang out that the decision would herald a new era in politics,” wrote Adam Bonica, a Stanford University political scientist, in a 2013 paper about the effects of Citizens United. “Three years on, there is little evidence that these predictions have come to pass.” Over the past year, Americans spent more on almonds than on selecting their representatives in Congress.

The article is here, interesting throughout.  Campaign finance, of course, is one of the areas where “the Left” is most likely to take an anti-science stance.

There is a new 538 article on this, by , and , here is one excerpt:

We first found that an economist’s research area is correlated with his or her political leanings. For example, macroeconomists and financial economists are more right-leaning on average while labor economists tend to be left-leaning. Economists at business schools, no matter their specialty, lean conservative. Apparently, there is “political sorting” in the academic labor market.

A word analysis indicates the most left-leaning phrase is “post Keynesian,” followed by “credit union.”  The most right-leaning phrase is “free banking,” and then “bank note” and “hedge fund.”  Here is some good news:

There’s no evidence that publication decisions are determined by editor ideology.

And yet:

…a left-leaning economist is more likely to report numerical results aligned with liberal ideology (and the same is true for right-leaning economists and conservative ideology)

This won’t be a popular paragraph with everyone:

Policymakers may need to “re-center” economists’ findings by adjusting for ideology. Take the area of tax rates for high earners. The average optimal tax rate reported by economists in our data is 41 percent. Using our model, we can also estimate that these economists as a group are slightly left of center. We can then figure out what optimal top tax rate a hypothetical centrist economist would report: 33 percent.

Here is the authors’ lengthy research paper on all of this (pdf).

For the pointer I thank Bruce Bartlett.

In principle, almost everyone agrees that investing more in education makes sense as it could help build human capital and see Chile advance out of “middle income status” and into the ranks of the developed world.

However, banning students from using vouchers to attend for-profit schools and prohibiting schools that receive public subsidies from receiving top-up payments from parents, also goes against the market-based system. That has startled Chile’s close-knit and conservative business class, which fears the return of statist policies once endorsed by socialist president Salvador Allende in the 1970s.

…Compounding the uncertainty is that the reform drive coincides with the end of a commodity boom that has seen the price of copper, which makes up half of Chilean exports, shrink 12 per cent this year. In the third quarter, economic growth collapsed to 0.8 per cent, from almost 5 per cent a year ago, while investment contracted 10 per cent.

Amid the abrupt slowdown, critics joke that Ms Bachelet’s unwieldy coalition, “The New Majority”, is much like Christine Lagarde’s “New Mediocre”, as the head of the International Monetary Fund recently described the world economy. Certainly, business confidence has fallen in the gloomy atmosphere, while Ms Bachelet’s popularity has plummeted to 42 per cent from 58 per cent in June.

The FT article has other points of interest.  Perhaps Chile soon will no longer be so overrated.

Some of the White House economists were dubious and privately called Mrs. Clinton’s health care team “the Bolsheviks.” In return, according to Ms. Rivlin, the economists were “sometimes treated like the enemy.” Their suggested changes were ignored. “We could have beaten Ira alone,” said Mr. Blinder. “But we couldn’t beat Hillary.”

There is more here from the NYT, mostly about Hillary, not about that episode.

Africa fact of the day

by on December 6, 2014 at 12:32 pm in Current Affairs, Political Science | Permalink

For now, the advance of democracy in Africa appears to have stalled. In 1990, just three of Africa’s 48 countries were electoral democracies, according to Freedom House, a Washington-based pro-democracy advocacy group. By 1994, that number had leapt to 18. Two decades later, only 19 qualify.

That is from Drew Hinshaw and Patrick McGroarty at The Wall Street Journal, the article is interesting throughout.

Indian industries have often complained that convoluted environmental regulations are choking off economic growth. As a candidate, Mr. Modi promised to open the floodgates, and he has been true to his word. The new government is moving with remarkable speed to clear away regulatory burdens for industry, the armed forces, mining and power projects.

More permanent changes may be coming. In a report made public last week, a high-level committee assigned to rewrite India’s environmental laws assailed the existing regulatory system, saying it has “served only the purpose of a venal administration” seeking to extract bribes.

To speed up project approvals, the committee recommended scrapping a layer of government inspections; instead, it said, India should rely on business owners to voluntarily disclose the pollution that their projects will generate and then monitor their own compliance, an approach the committee described as “the concept of utmost good faith.”

That is from Ellen Barry and Neha Thirani Bagri.  I am a fan of Michael Greenstone’s work, but I did not find this recent piece on Indian pollution sufficiently penetrating.

I enjoyed this LRB piece, here is one excerpt:

All Jerusalemites pay taxes, but the proportion of the municipal budget allocated to the roughly 300,000 Palestinian residents of a city with a population of 815,000 doesn’t exceed 10 per cent. Service provision is grossly unequal. In the East, there are five benefit offices compared to the West’s 18; four health centres for mothers and babies compared to the West’s 25; and 11 mail carriers compared to the West’s 133. Roads are mostly in disrepair and often too narrow to accommodate garbage trucks, forcing Palestinians to burn rubbish outside their homes. A shortage of sewage pipes means that Palestinian residents have to use septic tanks which often overflow. Students are stuffed into overcrowded schools or converted apartments; 2200 additional classrooms are needed. More than three-quarters of the city’s Palestinians live below the poverty line.

Since 1967 no new Palestinian neighbourhoods have been established in the city, while Jewish settlements surrounding existing Palestinian areas have mushroomed. Restrictive zoning prevents Palestinians from building legally. Israel has designated 52 per cent of land in East Jerusalem as unavailable for development and 35 per cent for Jewish settlements, leaving the Palestinian population with only 13 per cent, most of which is already built on. Those with growing families are forced to choose between building illegally and leaving the city. Roughly a third of them decide to build, meaning that 93,000 residents are under constant threat of their homes being demolished.

And this:

The crucial difference between the mid-1980s and today is that Palestinian civil society is now much weaker, and so, too, is the likelihood of coherent political organisation of the kind that emerged soon after the First Intifada began. The groups that then channelled political activity have been supplanted, either by the institutions of a technocratic PA whose existence is premised on close co-operation with Israel, or by NGOs whose foreign funders make assistance conditional on the pursuit of apolitical development projects or vague peace-building strategies that explicitly rule out non-violent confrontation with Israel and any initiative likely to drive up the costs of military occupation. Palestinian society is afflicted with dependency, and it is dependent on forces that wish to preserve the status quo.

It is interesting (and controversial) throughout.